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Ultimate Guide to Health Insurance

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Even before COVID-19 hit the global stage, it’s hard to avoid the magnitude and importance of health care in our lives. Now as the front lines workers in health care work tirelessly on the care of those ill from the virus, health care stands front and center as something to be concerned with for yourself and your family. 

Understanding health insurance is no easy task. It can feel like there are so many factors to consider, so many moving parts. You have to have a good understanding of how a plan works to even begin to understand if it will provide the right kind of coverage for you and your family.

Underlying all of the considerations for health care coverage is the enormous cost associated with health insurance.

Let’s tackle understanding all there is to know about health insurance. Read on to learn about all the considerations connected to health care

Understanding Health Insurance Basics

Starting with the basics, health insurance is a type of insurance purchased. It provides coverage for medical, surgical, or emergency care for the insured. 

There are a few ways health insurance coverage can work. The insured can pay for medical care and then be reimbursed by the health insurance company. Or the insurance company can pay the health care provider directly.

Depending on the coverage, the insured might have to pay a deductible ( more on this later). 

Health insurance might not cover all of your expenses. Generally speaking, the more it covers and the less you pay out of pocket, the higher the cost for the plan. Lower cost plans will generally provide less coverage.

Is Health Care Required?

The Affordable Care Act, commonly referred to as Obamacare, became law in 2010. The goal of the ACA was to provide all Americans with health care coverage that was affordable. It also originally required Americans to get some kind of health insurance

They could be covered through their employer, through private insurance they sought themselves or through the ACA health insurance marketplace

If an American did not comply, they faced a tax penalty. Remember, the goal was to ensure all Americans had coverage. 

January 1, 2020, the law changed. While the Affordable Care Act still mandates health coverage, if an American chooses to not comply, there is no longer a tax penalty. 

Some states still require that its residents have some type of health insurance policy. These states are:

  • California
  • Massachusetts
  • New Jersey
  • Vermont
  • Rhode Island

Washington D.C. residents also must have some type of coverage. 

Many felt the health care costs were prohibitive. While health insurance premiums can be expensive, there is a risk if you opt to not get insured. If health care costs can’t fit in your monthly budget, you risk an unexpected pile of big bills in the event of illness or accident.

Under the ACA employers who have less than 50 employees are not required to offer health insurance coverage to them. The ACA did create the Small Business Health Options Program (SHOP) which creates a marketplace for those small businesses (1 to 50 full-time employees) to get coverage. 

Employers with more than 50 employees are required to provide access to health care benefits. They also do not have access to the SHOP marketplace because of their size. More information about the ACA can be obtained from healthcare.gov.

Insurance Terms to Know

Obamacare or the ACA has already been covered. There are some other insurance terms to be aware of as you navigate decisions related to health care

Employer-based health insurance is a plan that the employer purchases for their employees. The federal government offers tax exclusions to employers for the purchase of this insurance. 

The ACA Marketplace was already mentioned. This is the place where those seeking insurance through the ACA can go shopping for insurance. The qualified health plans are those that are approved to be part of the marketplace. The plan must follow established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts).

Many people, especially those under the age of 30, will opt to get catastrophic health plans. This is another ACA option. It offers coverage for catastrophe care or if a medical incident has billed over $1,000. It won’t cover your office visit or prescriptions, but if you are in the emergency room because of an unexpected accident you will be covered.

Government-sponsored health insurance coverage is Medicare and Medicaid. More on these later. 

Short-term health insurance gets those insured under its coverage for major medical expenses. The law in most states says you can be covered under a short-term health insurance plan for up to one year. Although some plans now allow for continued coverage for up to 3 years.  Short term coverage tends to be less expensive and has limits on coverage. 

Gap insurance provides coverage in the short term as well. Most people who seek gap insurance are between two plans and need temporary coverage. 

Additional terms to watch for include:

  • Co-pay which is the amount you pay out of pocket after the insurance covers their part
  • Premiums are the cost for coverage paid to the insurance company
  • Deductible is the amount the insured pays before insurance coverage kicks in
  • Tax-credit is the amount offered to individuals or businesses because of health care costs

Many plans offer prescription coverage as part of a plan. Whether prescriptions are covered is an important consideration for many when shopping for health care coverage

Supplemental coverage often includes the option of adding insurance for vision or dental coverage. 

Who Should Consider Buying Health Insurance

You might be wondering if the cost of health care insurance is worth all the expense. Certainly, it can use up a large part of your monthly budget. 

Choosing to not get health care coverage can be a risky choice. If you become unexpectedly ill or are in an accident, the cost of care can be a financial disaster.

So, who should get health insurance? The short answer is everyone should get some kind of coverage. 

You might be wondering if the cost of health care insurance is worth all the expense. Certainly, it can use up a large part of your monthly budget. 

Here are some groups that should consider coverage. 

Families

If you are the breadwinner in your family, you want to get coverage for the family. A family plan will cover those members of your family in your care. ACA allows you to cover your children up to age 26, even if they are no longer dependents. 

Family plans often have a deductible required to be met. They also have deductibles. Once the overall family deductible is met, all members are considered to have met their individual deductibles. 

Students

As mentioned, you can stay on parent’s plans while you are a full-time student. If you graduate and are still under the age of 26, you can still be covered through your parent’s plan. 

Many colleges and universities also offer health care coverage to students. Do your research to see if this coverage is more affordable than your parents paying for you to stay on their plan.

Self-Employed

Many who are self-employed find it’s most affordable to shop the ACA Marketplace for coverage. Remember, while health insurance can be costly, it is also tax-deductible. So, you should get a break from it when tax time arrives. 

Self-employed folks often have varied income streaks. Make sure you budget and plan for those times when things might be slow and you have cash flow coming in.

Low-Income

The government-run program called Medicare is available for those who fall into the low-income category.  If you are having trouble affording health care or know your income is low, look at Medicare coverage. 

Veterans

Veterans can receive coverage through the U.S. Department of Veterans Affairs (VA). It’s smart to look at how two plans will coordinate to get optimal coverage and care. 

Senior Citizens

Once you are over the age of 65, you can qualify for Medicare. Medicare is the government-subsidized program for senior citizens to have health care coverage

Senior citizens on Medicare will want to look at Medigap insurance to cover the deductibles and the donut hole coverage that is part of Medicare

Public Health Insurance

As a general rule, there are two types of insurance for most people. There is public insurance like Medicare and Medicaid which you get through the government.

Medicare provides free or greatly reduced cost health care for anyone over the age of 65. It includes four parts of coverage:

  • Part A for inpatient (hospital) care, for which most people pay no premiums
  • Part B, for outpatient care, like doctor’s office visits (2020, Part B has a monthly premium of $144.60)
  • Part C, which is also called Medicare Advantage, and allows you to buy into private health insurance
  • Part D, for prescription drug coverage

Those over the age of 65 can apply for coverage by going to healthcare.gov.

Medicaid coverage is available for low-income families or individuals. The qualifying rates for Medicaid vary by state as does the cost of living vary from state to state. 

The Children’s Health Insurance Program (CHIP) aims to cover children under the age of 18. Often families might have too much income to qualify for coverage under Medicaid. Yet, private insurance is cost-prohibitive.

CHIP helps families in this bubble get coverage for their children. Check with your state for individual qualifying standards. 

Private Health Insurance

There is also private health insurance. Anyone can go to the ACA Marketplace and get private insurance. Many people also get private insurance benefits from their employers. 

For most private insurance, coverage involves networks and which you are allowed to use and or not use. Let’s take a look at some private health insurance options.

HMO

A health maintenance organization or HMO is likely to most restrictive because it requires the insured to see health care providers in a certain network. 

All of your care will be provided by a primary care physician (PCP). The PCP is the one who dictates your care and must write referrals for you to say any other care provider. 

PPO

A PPO, or a preferred provider organization, is less restrictive than HMO plans. You have the option of seeing an in-network doctor. This is often for less cost. You are not, however, restricted to just those care providers and can choose to go to an out-of-network doctor too. 

One advantage of a PPO plan is that you don’t need a referral to see other doctors from your PCP. Because they are less restrictive, PPO plans tend to be more costly than other options.

EPO

An exclusive provider organization or EPO is a combination of the HMO and PPO plans. 

The good part of an EPO is that you don’t need referrals to see specialists. You must still designate a PCP but can’t see out of network doctors. 

POS

The point of service plans or POS is a hybrid option of all of the above. You must designate a PCP like in the HMO plan. This PCP is responsible for the coordination of your care. 

You get to have access to the PPO style of network providers, although they are likely to be at a higher cost. There is also still the HMO network that can be less costly. If you choose that option, you must still get a referral from your PCP.

Health Insurance Enrollment

Health insurance has something called enrollment periods. This is the time when you can enroll or sign up for the plan. It’s also a window of time when you can elect to make changes to your health plan coverage. 

When is open enrollment for health insurance in 2020? This is a bit tricky to answer, especially considering today’s current climate. Generally speaking, they are in November and December for coverage beginning the next year. However, many plans also do an open enrollment period in March and April for coverage beginning May 1.

To get a definitive answer on open enrollment, check your state’s guidelines. If you have private insurance through an employer, they can also give that information specifically.

Open enrollment restrictions can also get waived if you have a qualified change in status, like a job change or a divorce. 

Understanding Health Insurance So It Works for You

Understanding health insurance, all the rules, regulations, and terminology can be overwhelming for even those who are well versed. This one part of life that requires research and paying attention to details to get the best possible coverage at rates you can afford. 

For other ideas about saving money and learning about personal finance and insurance-related concerns, visit our website often.

 

 

 

 

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